MSFT vs META: Capex Sets Up July 29 Risk
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- Microsoft posted quarterly revenue of $82.89B (+18.3%), with Intelligent Cloud up 30%, Azure up 40%, and an AI business running at a $37B annual rate (+123% YoY), backed by a $627B commercial remaining-performance-obligation backlog.
- Meta reported revenue of $56.31B (+33.08%) on ad impressions +19% and price per ad +12%, while Reality Labs posted a $4.03B operating loss that Zuckerberg tied to Meta Superintelligence Labs milestones.
- Microsoft's Q3 capex hit $30.88B (+84.4% YoY), and the author flags FY27 spend drifting toward $230B without proportional Azure reacceleration past 40% as the trigger for free-cash-flow repricing.
- Meta raised its FY26 capex guide to $125–145B and trades at ~19x forward P/E with 82% gross margins, a setup the author calls a wider margin of safety than Microsoft's "less-bounded" ramp.
- Polymarket traders put Meta's beat probability at 94.7% and Microsoft's at 91.5%, meaning the print itself is largely priced in and FY27 capex tone will dictate the post-earnings move.
- Microsoft's OpenAI dependency is the variable the author says he "cannot easily model," and is why he leans toward Meta going into July 29 despite calling Microsoft's underlying business arguably stronger.
Why it matters: Microsoft's $627B backlog gives Nadella cover to keep spending, but a FY27 capex guide near $230B without Azure reaccelerating past 40% would force free-cash-flow repricing; Meta has already digested a capex scare by telegraphing its $125–145B FY26 ceiling, narrowing its downside on the print. For investors choosing between the two, the capex gap — bounded for Meta, open-ended for MSFT — is what separates "priced for perfection" from "more at risk."
